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Pacific Biosciences (PACB): What's Up this Earnings Cycle?

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Pacific Biosciences of California Inc. (PACB - Free Report) is scheduled to report third-quarter 2016 results on Nov 2. Last quarter, the company reported a loss of 21 cents per share, a penny narrower than the Zacks Consensus Estimate.

Notably, Pacific Biosciences' results compared favorably with the Zacks Consensus Estimate in the last four quarters, with an average beat of 2.18%.

Let us see how things are shaping up for this announcement.

Factors Influencing This Quarter

Pacific Biosciences expects third-quarter 2016 revenues to grow sequentially as compared with the second quarter. Gross margin for the to-be-reported quarter is however anticipated to remain in the same range as of the prior quarter. Also, increasing demand for the new Sequel system and a growing customer base bode well for top-line growth. Pacific Biosciences expects product and service revenues to increase almost 70% year over year.

On the other hand, persistent losses and cash burn may prove to be headwinds in the near term. Management expects total operating expenses to increase of approximately 12% (up from 10%) in full-year 2016, due to higher stock-based compensation expenses. The company forecasts net loss of approximately $74 million in full-year 2016, including over $23 million of non-cash expense.

Overall, the company’s activities during the July–September period were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the third quarter deteriorated to a loss of 20 cents from a loss of 19 cents per share over the last 90 days.    

Earnings Whispers

Our proven model does not conclusively show that Pacific Biosciences is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP:  The Earnings ESP for Pacific Biosciences is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 20 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Pacific Biosciences carries a Zacks Rank #2, which increases the predictive power of ESP; but when combined with a 0.00% ESP, surprise prediction difficult becomes difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
 

PACIFIC BIOSCI Price and EPS Surprise

 

PACIFIC BIOSCI Price and EPS Surprise | PACIFIC BIOSCI Quote

Stocks That Warrant a Look

Here are some medical stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Glaukos Corporation (GKOS - Free Report) has an Earnings ESP of +100% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Penumbra, Inc. (PEN - Free Report) has an Earnings ESP of +45.46% and a Zacks Rank #3.

Invuity, Inc. has an Earnings ESP of +1.61% and a Zacks Rank #2.

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